JFE Holdings to Invest 1 Trillion Yen to Spur Overseas Expansion

By Masumi Suga and Yuriy Humber -
Apr 20, 2012

JFE Holdings Inc. (5411), Japan’s second-
largest steelmaker, will spend 1 trillion yen ($12 billion) over
three years on expansion, with a focus on Asian countries where
demand growth is faster than the domestic market.

Half of the investment will be allocated to countries
outside Japan by March 2015, doubling the proportion of overseas
spending from the previous three years, as the company adds
plants and eyes acquisitions, according to a statement today by
Tokyo-based JFE, which reported a profit in the fourth quarter.

Japanese steelmakers, including JFE and Nippon Steel Corp. (5401)
are targeting markets in Southeast Asia, India and China to
counter stagnating demand at home. JFE has set a goal of 4
trillion yen in annual sales by March 2015, a 26 percent
increase from the level in the fiscal previous year, according
to the statement.

“We will seek new growth on the stage of global markets as
we concentrate our spending in emerging markets,” Executive
Vice President Shinichi Okada said today at a press conference
in Tokyo.

The company’s annual sales may grow to 40 million metric
tons in five years, according to the statement. It sold 24.7
million tons in the year ended March 31, excluding affiliates.

JFE didn’t provide a profit and sales outlook for the
current business year, saying it has yet to settle price talks
with customers.

JFE fell 3.3 percent to 1,557 yen in Tokyo. The value of
the stock has gained 12 percent since the beginning of this
year.

The company reiterated it will start a feasibility study to
build integrated steelworks in Vietnam, in which it is the
majority stakeholder with Taiwan’s E United Group.

Quarterly Profit

The steelmaker swung to a profit last quarter as sales
arrested a decline and the yen fell from a postwar high. Net
income was 625 million yen in the fourth quarter ended March 31,
compared with a loss of 5.9 billion yen a year earlier,
according to Bloomberg calculations based on the full-year
result released today.

Japan’s currency declined about 9 percent against the
dollar at the end of March, compared with a record high of 75.35
yen on Oct. 31, helping restore the competitiveness of Japanese
mills against rivals in South Korea and China.

Steelmakers will likely boost sales this year as carmakers
plan to ramp up production and post-quake reconstruction helps
demand, SMBC Nikko Securities Inc. said in an April 16 report.

For the full-year ended March 31, JFE reported a loss of
36.6 billion yen, its first annual loss since it was created
through the merger of Kawasaki Steel Corp. and NKK Corp. in
2002. Operating profit fell 76 percent to 44.8 billion yen for
the past year, while sales declined 0.9 percent to 3.17 trillion
yen.